Retirement
What are my Scheme
retirement benefits?
Are there any reductions for
retiring early and drawing immediate benefits?
What if my employer retires
me on grounds of redundancy or business efficiency?
What happens if I have to
retire early due to ill-health?
What if I want to have a
gradual move into retirement?
What if I carry on working
after age 65?
You can retire and receive your Scheme
benefits in full once you have reached age 65. The Scheme also makes provisions
for the early payment of your benefits.
When you retire, you will receive a
pension and have the option to take part of your pension as a tax-free lump
sum. If you joined the Scheme before 1 April 2009, your standard benefit
package will include an automatic tax-free lump sum as described in the 'How
Scheme benefits are calculated' section of this website.
You can elect to retire and receive your
Scheme benefits from age 60 onwards. You may be able to retire and receive your
Scheme benefits from age 55 but only if your employer agrees. However, if you
were paying into the Scheme on 31 March 2009 the earliest age you may be able
to retire with your employer’s consent and receive your benefits is age 50,
rather than age 55, provided you do so before 31 March 2010. Employer’s consent
to draw benefits before age 60 is an employer discretion. Your employer must
set out its policy on this in a published statement.
If you retire between age 60 and 65 your
Scheme benefits, initially calculated as set out in The Benefits section of
this guide, will be reduced to take account of their early payment and the fact
that your pension will be payable for longer. However, if you joined the scheme
before 1 October 2006 you will have some protections from reduction under the
Rule of 85. Please see the section below 'Removal of the Rule of 85'.
The Rule of 85 refers to a provision of
the Scheme which allowed members who retired early to take their pension
entitlements, without actuarial reduction, if the sum of their age and length
of membership equalled 85 years or more. Members over age 60 could do this as
of right; members over age 50 but less than age 60 required their employer’s
consent. The Rule of 85 has been abolished from 1 October 2006 in order to
comply with the European Union Directive on Age Discrimination. Anyone joining
the Scheme after 30 September 2006 will have his or her pension benefits actuarially
reduced if he / she retires before age 65 to take account of early payment.
Existing members, who were contributing
to the Scheme on 30 September 2006, have some Rule of 85 protections. These
protections are as follows:
• All existing members at 30 September 2006 are protected until 31 March
2008 i.e. the benefits you
accrue up to 31 March 2008 will be protected under the 85 year rule.
• Those existing members at 30 September 2006
who will be 60 or over and meet the 85 year rule by 31 March 2016 are fully
protected i.e. the benefits you accrue up to 31 March 2016 will be protected
under the 85 year rule.
• Those existing members at 30 September 2006
who will be 60 or over and meet the 85 year rule between 1 April 2016 and 31
March 2020 will have full 85 year rule protection to 31 March 2008 and have
some 85 year rule protection, on a sliding scale, to 31 March 2020.
If you are aged 55 or over you will be
entitled to the immediate unreduced payment of your Scheme benefits. However,
if you were a member of the Scheme on 31 March 2009 and retire on grounds of
redundancy or business efficiency before 31 March 2010 you will receive
immediate unreduced payment of your Scheme benefits providing you are aged 50
or more.
If you have to leave work at any
age due to permanent ill-health which prevents you from doing your job and you
have at least one year’s Scheme membership, the Scheme provides a tiered
ill-health retirement package.
To qualify for ill-health benefits,
the Committee must be satisfied that you will be permanently unable to do your
own job and have a reduced likelihood of obtaining another job before age 65.
The Committee’s decision is based on a report from an independent registered
medical practitioner qualified in occupational health medicine.
The tiers provide pension
benefits dependent on the severity of the illness and are described below:
Tier 1 - If you are permanently incapable of doing
your job and have no reasonable prospect of gaining any employment before age
65, your pension is based on accrued membership plus 100% of prospective
membership between leaving and age 65.
Tier 2 – If you are permanently incapable of doing
your job and have a reasonable prospect of obtaining gainful employment, then
your pension is based on accrued membership plus 25% of prospective membership
between leaving and age 65.
‘Gainful employment’ is defined as paid
employment for not less than 30 hours in each week for a period of not less
than 12 months.
‘Permanently incapable’ is defined as the
member will, more likely than not, be incapable until, at the earliest, his
65th birthday.
If you are part-time, any extra
membership awarded due to ill-health retirement will be reduced to reflect your
part-time hours at leaving.
This is known as flexible retirement.
From age 55, if you reduce your hours or move to a less senior position on a
reduced pay scale, and provided your employer agrees, you can draw some or all
the pension benefits you have built up – helping you ease into retirement. If
you were a member of the Scheme on 31 March 2009 and you do not have a break in
your employment with your employer then, the earliest age at which you may be
able to draw some or all of your benefits on flexible retirement is 50, rather
than 55, provided you take flexible retirement before 31 March 2010. If you
take flexible retirement before age 65, your benefits may be reduced to take
account of their early payment unless your employer agrees to waive the
reduction in whole or in part.
If you carry on working after age 65 you
will continue to pay into the Scheme, building up further benefits. We will pay
your pension when you retire, or when you reach the eve of your 75th birthday,
or if you take flexible retirement with your employer’s consent, whichever
occurs first. If you draw your pension after age 65, it will be increased to
reflect the fact that it will be paid for a shorter time. Your pension has to
be paid by your 75th birthday.